Arm's length

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An arm's length financial market is a market where there is less interaction between the one who is being financed and the one who does the financing. Buyers and sellers do not have a relationship with one another. [link]

A good example of an arm's length market is the US financial market, while the European financial market is an example of a relations based market, although in Europe the arm's length type market is growing. Arm's length based markets deliver superior performance to relation based markets when the firms and market are large, where firms are more formally organized, have good transparency and strong legal enforcement along with a higher number of revolutionary than evolutionary innovations.

 

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